Energy labels explained: is the efficient model worth the extra money?
Labels such as the yellow EnergyGuide sticker and the ENERGY STAR mark help you compare similar appliances. The useful move is to turn the label into a payback period.
What to read on the label
- Estimated yearly energy use or yearly cost
- Capacity and type, so you compare like with like
- The assumptions behind the estimate, such as the electricity rate used
Payback in one line
Payback years = extra purchase price / yearly savings
Say the efficient model uses 120 kWh less per year. That saves 120 x $0.17 = $20.40 a year. If it costs $120 more, payback is $120 / $20.40, about 5.9 years. If you expect to keep it only four years, the cheaper model wins on cost.
When efficiency matters most
Efficiency pays off most for appliances that run for many hours, like refrigerators or heating and cooling equipment. For something you use half an hour a day the savings are small even when the efficiency gap looks big.
Checklist
- Compare same-size models
- Convert the label to your own electricity rate
- Compute payback and compare it to how long you will keep the product
- Remember that rates and usage differ from the label assumptions